HGB or leasehold — which is actually better?

One is a registered right you can mortgage. The other is a contract that expires. The right answer depends on what you intend to do with it.

This is the decision most Bali buyers get talked into rather than make. The two structures are not competing versions of the same thing.

What each one actually is

HGB is a registered land right. It appears on a certificate at the land office, it can be mortgaged, and it can be transferred. A foreign individual cannot hold it, so in practice it means holding through a PT PMA.

Leasehold is a contract. You do not own a right in the land; you have an agreement with the owner permitting use for a period. It is not registered as a land right in the way HGB is, though notarisation and registration are strongly advisable for enforceability.

	HGB via PT PMA	Leasehold
Nature	Registered land right	Contractual right
Term	30 + 20 + 30, each subject to approval	Whatever the contract says, commonly 25–30 years
Can be mortgaged	Yes	No
Setup cost	Company formation plus ongoing compliance	Notary and legal fees only
Ongoing burden	Annual company reporting and tax filings	None beyond the lease terms
Ends with	Renewal application	Reversion to the owner

The cost nobody compares

A lease is a wasting asset. Whatever you paid buys a fixed number of years, and at the end the land and everything you built returns to the owner.

That has a real annual cost. On a USD 300,000 premium with 25 years remaining, it is USD 12,000 a year of value consumed before you count a single expense — which is why a lease that appears to yield 12% can be losing money.

Put your figures through the calculator and set the residual to zero. That is the honest comparison against an HGB you expect to renew.

When a lease is the better answer

Shorter horizons, where company compliance overhead outweighs the benefit
Personal use rather than a licensed business
Plots where HGB conversion depends on an owner who will not cooperate
Smaller sums where PT PMA formation and annual filings are disproportionate

When HGB is the better answer

Commercial projects intended to hold value and be resold
Anything you need to finance, since a lease cannot be mortgaged
Longer horizons where renewal is realistic
Structures where the land will be held for a genuine operating business

The clause that decides a leasehold

If you take a lease, the extension clause is the whole investment.

It must be unconditional, priced or formula-based rather than "at market rate to be agreed", and binding on the owner's heirs and successors. A verbal assurance that "extension is no problem" is worth nothing when the owner dies and their children inherit the land with no obligation to you.

Transfer and sublease rights must also be explicit. If the lease does not say you may transfer it, you may not, and your exit disappears.

What neither structure fixes

Neither answers whether you can legally run a rental business on the plot. That depends on zoning, the business classification and the permits — and since July 2026, the classifications a new PT PMA can register in Bali have narrowed sharply.

Choosing the structure before checking the use is the wrong order.